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| Author: | Wagner, Sven |
| Title: | Competitive dynamics and strategic development in the pharmaceutical industry - A case study on leadership change |
| Publication type: | Master's thesis |
| Publication year: | 2005 |
| Pages: | 135 Language: eng |
| Department/School: | Tuotantotalouden osasto |
| Main subject: | Yritysstrategia ja kansainvälinen liiketoiminta (TU-91) |
| Supervisor: | Lamberg, Juha-Antti |
| Instructor: | Lasola, Timo |
| Digitized copy: | https://aaltodoc.aalto.fi/handle/123456789/93273 |
| OEVS: | Digitized archive copy is available in Aaltodoc
|
| Location: | P1 Ark Aalto | Archive |
| Keywords: | pharmaceutical industry competitive dynamics aggressiveness dethronement networks |
| Abstract (eng): | The study aims at describing leadership change in the pharmaceutical industry from the viewpoint of competitive dynamics and strategic development from 1985 to 2004 through a case study of Merck & Co and Pfizer Inc. Previous studies have described leadership change in terms of competitive aggressiveness considering large data samples. This study's focus on a detailed description of two companies makes it possible to describe and analyse the development in detail. The rational for choosing Merck and Pfizer as the two companies for study is their market position during that time. Merck had been the world's largest pharmaceutical company during the second half of the 1980s and most of the 1990s. In the early 2000s Pfizer managed to outgrow Merck in size and claim industry leadership in terms of sales volume. Data for this study was gathered from news databases and categorized into different classes of competitive and strategic action for analysis. The pharmaceutical industry is interesting in several ways. It is a highly regulated industry, it has strongly consolidated during the time of study and the emergence of biotechnology can be described as a disruptive event though it has not let to an industry shakeout. Furthermore, the industry can be described competitively as a long cycle industry due to widespread usage of patents and the aforementioned influence of regulation. The study describes the industry and its business model in order to be able to assess company actions and determine their importance within the industry context. This shows the uniqueness of the market through the division of consumer (patient), decision maker (physician) and payer (insurer) and the importance of a strong legal system in order to protect innovation. In order to take into account the effect of technology change, the firm's networks are analysed. The results of the study indicate that there was no significant difference in competitive behaviour from a quantitative point of view. The study concludes that competitive aggressiveness had a minor impact on leadership change. This is explained through the growing markets and the fact that direct competition took place only in few product markets. Regarding the impact of firm's networks the study did not find significant differences between both companies in terms of their networking behaviour. Most significantly, a difference was found in strategic behaviour and the perception of the environment. While Pfizer reacted to industry pressures and successfully participated in the process of industry consolidation, Merck refused to perform mergers and acquisitions but reacted strongly to a perceived threat in the American market environment. Furthermore, the study shows that past success lead to strategic inertia on the part of Merck which made it difficult for the firm to react to the threat posed by newly merged companies. |
| ED: | 2006-02-03 |
INSSI record number: 30582
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